The dilemma Evan Blue faces stems from a report by sustainability advocacy group Ceres that calls on companies to take climate change into consideration in their risk models and develop response strategies. The fictional vice president of Traveler’s Insurance is tasked with briefing the company’s board on the matter the next day. He must decide if there is a business case to be made for taking action in response to climate change risk. Students are asked what the company’s responsibility is and if integrating climate change into its risk models will make it a better underwriter or price it out of certain markets.
Travelers Insurance: Focusing on Climate Change and Natural Catastrophe Risk
by: Andrew Hoffman
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After reading and discussing the material, students should:
- Discuss climate change strictly as a business concern.
- Expand the discussion of climate impacts to include adaptive measures to the usual conversation around mitigation.
- Understand the insurance and reinsurance sectors and consider how the physical impacts related to climate figure into their business planning models.
- Consider multiple ways of making the business case for addressing climate change within the insurance sector.
- Consider the multiple (existing and emergent) products within the insurance sector and how climate change alters their structure and performance.
- Discuss a company’s obligation to do the “right thing” with regard to climate change as well as whether the “right thing” is always clear for a company.